Varying Development Standards: A Case for Change

The NSW Department of Planning, Industry and Environment (DPIE) is seeking feedback on its proposed reforms to clause 4.6 of the Standard Instrument – Local Environmental Plan (Standard Instrument), which provides relief to proponents of development from strict compliance with certain development standards.

In an Explanation of Intended Effect (EIE) published earlier this month, DPIE stated that the reforms would reduce complexity, uncertainty and cost in the current process for varying development standards, as well as increase transparency in the planning system.

The current process for varying development standards

Clause 4.6 of the Standard Instrument is a mandatory clause appearing in every Local Environmental Plan (LEP) which provides that development consent may be granted even though the development would contravene a development standard imposed by the Standard Instrument or any other environmental planning instrument. The stated objective of the variation procedure is to provide flexibility in the application of certain development standards to particular development in order to achieve better outcomes for and from development.

Proponents must apply in writing for relief under clause 4.6 and applications must meet the following conditions:

1. The provision must be a development standard that has not been specifically excluded from the operation of clause 4.6. For instance, development cannot contravene any development standard for complying development or development standard containing BASIX requirements. Consent authorities also retain a discretion to include additional development standards within their LEPs which cannot be varied;
2. Compliance with the development standard must be “unreasonable or unnecessary in the circumstances of the case” and there must be “sufficient environmental planning grounds” to justify contravening the development standard;
3. The consent authority must be satisfied that the proposed development will be in the public interest because it is consistent with the objectives of the particular standard and the objectives for development within the zone in which the development is proposed to be carried out; and
4. The Secretary must grant concurrence for the development.

After determining a development application under clause 4.6, the consent authority is required to keep a record of its assessment of the factors required to be addressed in the applicant’s written request.

Issues identified in the EIE around the current process

In the EIE, DPIE pointed to a growing body of case law pertaining to clause 4.6 as evidence of the undue complexity and uncertainty inherent in that provision. For instance, there are ongoing questions as to whether the consent authority is required to be directly satisfied that the requirements of clause 4.6 have been met, and as to whether an applicant is required to demonstrate that better outcomes are achieved for, and from, the development, through the variation. Uncertainty around the application of clause 4.6 has generated significant cost burdens for proponents and resourcing implications for local councils and the courts.

DPIE has received feedback that the “unreasonable or unnecessary” test has introduced a level of discretion which can potentially create opportunities for corruption. It referenced findings and recommendations from Operation Dasha, a recent NSW Independent Commission Against Corruption (ICAC) investigation into the conduct of the councillors of the former Canterbury City Council and others, that varying development standards can dilute transparency in the planning system. DPIE considered that the requirement to obtain concurrence does not encourage accountability given the vast majority of concurrences are assumed. For instance, according to NSW Planning Portal data, just 32 concurrence applications were received by DPIE in 2020.

Finally, DPIE considered that the range and nature of exclusions made by consent authorities under clause 4.6 has resulted in confusion in the application of the clause and undermined its objectives in providing an appropriate degree of flexibility in applying certain development standards to development.

Proposal to recast clause 4.6 of the Standard Instrument

DPIE has proposed revising clause 4.6 to require consent authorities to be directly satisfied that written requests for variation of development standards meet the following criteria:

1. That the proposed development is consistent with the objectives of the relevant development standard and land use zone. We note that this requirement largely mirrors the current public interest requirement in clause 4.6(4)(a)(ii); and
2. That the contravention will result in an improved planning outcome when compared with what would have been achieved if the development standard was not contravened. In considering the question of improved planning outcomes, the consent authority will be required to consider the public interest, as well as environmental, social and economic outcomes.

DPIE has also sought feedback from stakeholders on the development of a potential alternative test for minor variations. That is, it envisages situations in which variations may be so minor that it is difficult to demonstrate an improved planning outcome, yet the proposed variation is appropriate due to the particular circumstances of the site and the proposal.

Proposed measures to improve transparency and accountability

In addition to recasting the terms of clause 4.6, DPIE has proposed removing the discretion of consent authorities to exclude certain development standards from the variation procedure, whilst retaining the current exclusions relating to complying development and BASIX requirements. Consent authorities will also be required to publicly report reasons for their decisions under clause 4.6 on the Planning Portal, consistent with recent ICAC recommendations. Ongoing monitoring and risk-based audits of variation decisions will be mandated. The concurrence mechanism will also be removed as it is considered an ineffective and cumbersome means of providing appropriate oversight.

A positive proposal for developers?

There are features of DPIE’s proposal which would be of benefit to developers, namely:

1. As stated above, it is presently unclear as to whether consent authorities are required to be directly satisfied that the requirements of clause 4.6 have been met. It is also unclear as to whether applicants are required to demonstrate that better outcomes are achieved for, and from, the development through the proposed variation. Therefore given the requirement under DPIE’s proposal that consent authorities be directly satisfied of the relevant criteria, the new clause 4.6 procedure should remove any uncertainty on those requirements;
2. Removing any residual discretion on the part of consent authorities to exclude development standards from the variation procedure should provide a greater degree of flexibility to developers in the application of certain development standards, consistent with the intention of clause 4.6. It will also create fairer outcomes, given the present potential for different development standards to be excluded across different LEPs; and
3. The imposition of a duty for consent authorities to publicly report the reasons for their clause 4.6 decisions should promote certainty and consistency in decision-making, which would be of benefit to developers seeking to weigh up the prospects of their applications succeeding.

It is doubtful, however, that any requirement under the proposed “improved planning outcomes” test for consent authorities to consider environmental, social and economic outcomes, will be apt to generate any less litigation. For instance, there is potential for clause 4.6 variations to result in improved economic outcomes, to the detriment of environmental outcomes, but no means of guiding that discretionary exercise within the proposed test. Additionally, a variation may result in a worse outcome for neighbours, but an improved outcome for the development itself. And as acknowledged by DPIE itself, the test may be problematic in its application to trivial or minor variations. Whilst the DPIE has suggested that an alternative test may be appropriate in the case of minor variations, there is no detail given as to what this test would entail, and having two tests may add additional complexity and controversy to the variation process.

DPIE will be exhibiting the proposed reforms to clause 4.6 of the Standard Instrument until 12 May 2021. For advice on what the reforms may mean for industry, or for assistance in preparing a submission on the reforms, feel free to reach out to Samantha Daly, Partner in environment and planning at Johnson Winter & Slattery.

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